Your analysis is too simplistic. Do you mean software companies have higher margins? Top 20 profitable companies in the US only include 3 'software' companies:

Your analysis is too simplistic. Do you mean software companies have higher margins? Top 20 profitable companies in the US only include 3 'software' companies: http://www.bloomberg.com/visual-data/best-and-worst/most-profitable-in-technology-in-u-dot-s-companies http://www.bloomberg.com/visual-data/best-and-worst/most-pro... Scale-up is non-trivial in both software and non-software companies. Even among non-software companies, there is a ginormous amount of variability in terms of profitability and easy of scale up.